The Australian Taxation Office (ATO) has released data estimating the cost to Treasury of wage-earners, including public servants, who cheat the system by not fully complying with the law.
The ATO believes the income tax gap for individuals who lodged personal tax returns in 2014-15 was approximately 6.4 per cent, or $8.7 billion.
It said the gap was an estimate of the difference between the tax the ATO collected and the amount that would have been collected if every taxpayer was fully compliant with the law.
Deputy Taxation Commissioner, Alison Lendon said there were around 9.6 million individuals who were not in business and who lodged tax returns.
She said these taxpayers earned their income from salary, wages and investments.
“Over 93 per cent of income tax received from individuals not in business is paid voluntarily or with little intervention from the ATO,” Ms Lendon said.
“The tax gap for individuals not in business is primarily driven by incorrectly claimed work-related expenses.”
She said common mistakes include claiming deductions where there was no connection to income, claims for private expenses, or no records to show that an expense was incurred.
Ms Lendon said other areas of concern included high rates of incorrect claims for rental property expenses and the on-reporting of cash wages.
“What we have seen is that most people make small, but avoidable, errors so we will ramp up our assistance to help these people understand their obligations and get things right,” she said.
“We are also asking people to take just a little extra care with what they claim, because all of those little amounts add up.”
Ms Lendon said a smaller number of people were deliberately doing the wrong thing.
“These people can expect closer attention from us, especially this tax time,” she said.
